RE:New level of understandingI figured the share prices was being manipulated on the backend. Suncor management is just taking advantage of it in a big way. If we are going into a recession its best to not be as overleveraged and pay down debt than the opposite. I see all these people who bought into the housing market with huge loans and if interest rates go up they are in big trouble. Same with companies. Interest rates are going to go up and the cost of borrowing will increase with it. Best to strengthen the balance sheet at this time. Feels like 2008 when oil went nuts before the crash.
Obscure1 wrote: Now that my eyes have been opened to the power of the option underwriters, I'm looking at the SHORT position with a new level of understanding.
Now that I understand that the option underwriters have an agenda with specific timing objectives, suddenly the changes in the SHORT position make a lot more sense. When the SHORTS can see that the OPTION underwriters will benefit from the share price going down, they literally jump on board the powerful underwriter train which makes the underwriter's job easier. A nice symbiosis is created and who is going to stop them? Nobody in the short run.
It appears to me that the underwriters got caught by their belief that the ESG movement was going to keep rolling for longer than it did. As such, the underwriters didn't anticipate the upward movement of oil prices and in hindsight, they ended up setting the strike prices for forward expiry dates too low. The result was the in-the-money call option to put option inbalance.
I think a somewhat decent but not exact analogy is what you see from the sports books in Vegas. When the books see too much money being bet on one side, they move the line until money starts to pour into the other side of the bet as their goal is to have a flat position by game time (as they make their money on the spreads). The option underwriters hope for the same thing as the sports books, but when too much money hits one side of the bet, the underwriters "move the line" in their own way. They would never admit to it, but we see evidence of it around the 3rd Friday of every month and every quarter.
SU should be on a powerful run, but the price has been fighting the trend for far longer than one would expect. Now it makes sense and it has nothing to do with mgmt moves or non-moves or how well the company is doing. The bottom line is that there is nothing the company can do in the short run other than to stick to their knitting and buy back as many shares as they are allowed while the shares are ON SALE.
Unless you are a day trader or even a momentum trader, all you can do is decide if the company share price represents good value. If you are looking for guidance when it comes to value, the BoD of SU, who should know the story better than anyone, have re-upped their commitment to keep buying back shares at the fastest rate in the history of the company. The analysts keep increasing their targets which are now moving into the 50's.
It is a well known fact that the financials of a specific company only account for 5% of the share price move on a short term basis. The market continues to puke on the SU share price because the pros continue to manipulate things to their advantage. It will pass when the underwriters get back on side.
If you are whining and grinching about management, you might want to take a closer look at the big picture.